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Commentary

Netflix's 100 Millionth Customer Will Be Acquired By Data As Well As Content

We’ve swiftly entered an era where consumers are always-on and perpetually streaming content. That trend created new opportunities for marketers to interact with their target
audiences in more interesting and personalized ways, leading to deeper insight and greater returns.

The billion-dollar question remains whether publishers like Netflix can
sustain spending up to $300 per customer on acquisition, while continuing to spend billions on content for the foreseeable future; current estimates see Netflix spending $6 billion on content in 2017
and $1 billion marketing that content.

Content is great, but companies like Netflix still need to fight to acquire customers and to keep them engaged. How? Well, Netflix’s
entire customer base is signed-in. That means Netflix has the ability to analyze viewing data across platforms and they, as well as other entertainment subscription services like them, have a unique
bank of data-rich subscriber profiles that allow them to have meaningful interactions with their subscribers.

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It has become clear that modern publishers will not be able to
survive without leveraging first-party customer data. As content consumption shifts to devices that are individually tracked, entertainment marketers must learn from the tactics employed in
performance-based advertising.

Driving an audience to sign-in will soon rival the need to get them to tune-in, as content owners and publishers aggressively link visitor
devices and profiles to measure the impact of their advertising on actual behavior.

Data management platforms that allow customer acquisition activities to be measured and
optimized in common terms, by syncing ad-tech identifiers (“cookies”) to CRM identifiers (such as an email address) will come to the forefront when consumers opt-in for email newsletters
or sign-in to their accounts.

The benefits of this DMP-enabled based approach on customer acquisition are significant, providing greater returns on customer acquisition spend.
On the publisher side, this linkage needs to become part of a concerted marketing strategy to increase yield, helping determine what actions an audience might take after ad exposure.

Such “closed loops” of measurement have long been the dream of cable TV advertisers. Those same loops, and the creation of first-party viewership data, now belong directly to
media owners and content publishers, who can assess the effectiveness of the digital marketing products they offer and devise new strategies if they are not cutting it.

Buyers are
shifting away from purchasing reach and frequency and moving towards programs that drive ticket sales, site traffic, and changes in attitudes among precise segments of consumers. So much so, that an
“audience” is no longer an extrapolation based on a sample of television viewers but a portable asset, that publishers can pass on and monetize, enabling marketers and agencies to pressure
their suppliers to find and motivate the right individuals.

Data management platforms and onboarding services that link online and offline providers transitioned from buying a
demographically attractive audience, or even a third-party “high value” audience segment, to matching a precise audience to precise television set top boxes or OTT
users.

For marketers who seek to entertain audiences along the way, there is hope: technology will enable portability of their audiences, but also reward the most effective
storytelling that can connect with consumers.

For media owners, advertisers will need open access to the same data to find their audience within your platforms — why
should advertisers pay to reach customers they don’t care about, or whose profile attributes are inaccurate? By accepting the broader role marketers will play in audience definition and the
tracking of success, publishers can expect higher spend and better storylines. Publishers should worry less about densely packing ads into every experience and more about driving their audience to
sign-in.

However, this will come at a cost to marketers, agencies, and programming distributors, in the form of secure and extensible platforms for identifying and tracking
audiences. Audience development teams need to evolve the technical skill to forge the right partnerships and make integrations a crucial rule. Marketers who control their own audience and put it to
work must build their own moats through the capture and control of first-party data, and ownership of their technology stack such as a data management platform.